November 11, 2024: Troubled lithium battery recycler Li-Cycle was awarded a $475 million loan last week from the US Department of Energy. The facility which is $100 million more than discussed earlier in the year, will act as a financial lifeline to the Glencore owned company.
The DoE is also considering at $2 billion to Redwood Materials, another lithium battery recycling firm.
The 15-year loan, which was priced with a 0% spread over 10 year US Treasuries, will be used to build a battery processing facility in Rochester, New York State. This would make the plant the largest source of battery grade lithium in the US.
The total cost of the plant will be around $960 million meaning a further $487 million will be needed from private investors. The DoE award should help underpin such further investments.
It is the first DoE loan for a battery resource facility. Li-Cycle reckons the project will create 855 construction jobs and over 200 permanent jobs.
The loan was part of president Biden’s climate agenda aimed to boost the US renewable sector, help ensure self-sufficiency for critical materials and advance the US efforts into the energy transition.
The timing of the award was designed to ensure financial support for the company irrespective of the results of the US presidential election. For the past few months the Biden administration has rushed to ensure it spends the majority of available grant funding under the IRA. This was in anticipation of a possible win by Donald Trump who, in the event, has won and takes up power on January 20.
Li-Cycle had sought the loan for nearly three years, but cost overruns and technical issues forced it to hire a corporate restructuring expert last year, a step that sparked questions about its survival.
Its stock has dropped more than 75% in the past year.
Construction could take 12 to 15 months once full funding is secured. The Rochester plant will convert black mass from Li-Cycle’s other facilities into source material ready to be used in making the batteries.
Li-Cycle aims for the facility to produce 8,250 tonnes of lithium carbonate per year, as well as 72,000 tonnes of mixed hydroxide precipitate, a precursor product containing nickel and cobalt that can be used to make batteries.
Glencore, which has issued debt to Li-Cycle that can be converted into equity that would make it the company’s largest shareholder, has agreed to buy all of the Rochester facility’s MHP. That agreement, announced last week, helped secure the Energy Department loan, officials said.
